All posts tagged bond default

If Greece fails to pay the International Monetary Fund a $1.7 billion debt coming due at the close of business Tuesday—around 6 p.m. EDT—the country will immediately be in arrears to the fund, an event normally known in the financial world as a “default.” Read More »

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China’s decision to let the bonds of a solar-equipment maker default, the first known case in China’s domestic commercial bond market, is the right move, say economists, even as it underscores a key challenge for regulators: how to introduce more risk into financial markets without fueling a crisis.

That balancing act is something that has eluded many of the world’s most prominent regulators and central bankers over decades, if not centuries.

This week, credit markets were jolted when Shanghai Chaori Solar Energy Science & Technology Co. said it was unable to meet interest payments due Friday of 89.8 million yuan ($14.7 million). The status of the principal, due in 2017, remains unclear.

In the past, China has always jumped in on threatened corporate bond, trust and wealth management product defaults with a quick rescue package. While these bailouts provided temporary relief, they also leave investors convinced the government will always bail them out, fueling a cycle of ever-riskier bets and more bad debt known as moral hazard.

“In letting this one happen, China’s experimenting in an area where they know there are lots of problems,” said CLSA economist Francis Cheung. Read More »

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